The Mortgage Bankers Association reported today that applications for home loans fell last week for the fourth time in five weeks. The industry group's market composite index headed lower by 2.3% compared to the previous seven-day period. This marks the fifth time in 10 weeks the index has decreased. At the present level, it's off its May high by 54%.
Since the first week of May, the average rate on a conforming 30-year fixed-rate mortgage has skyrocketed, going from 3.35% all the way up to 4.57% in September. Over the last few weeks, however, the rate has dropped back down to 4.35%. The recent correction aside, the magnitude and speed of the advance have been unprecedented and is widely credited with slowing down the markets for both new and existing homes.
Applications to refinance existing mortgages have been the hardest hit by the hike in rates. At the beginning of September, the MBA's refinance index dropped by a precipitous 20%, the biggest single-week decline of 2013. By comparison, the same figure declined by 7% last week, a disappointing result, but not calamitous.
All told, refinance volumes are off their early May high by 63%. And over the same time period, they've gone from a 76% share of overall mortgage application activity down to a 64% share.
Applications to purchase a home haven't been hit as hard. In fact, the MBA's purchase index rose last week by 6%, though purchase-money mortgage applications remain down over the last six months by 18%. Compared to the same month last year, they're down by 10.5%.